Question

The comparative statements of Wahlberg Company are presented here.

Wahlberg Company Income Statement For the Years Ended December 31
		2020			2019
Net sales		$1,815,100			$1,745,300
Cost of goods sold		1,011,300			995,000
Gross profit		803,800			750,300
Selling and administrative expenses		517,400			479,000
Income from operations		286,400			271,300
Other expenses and losses
Interest expense		18,800			13,500
Income before income taxes		267,600			257,800
Income tax expense		80,016			77,100
Net income		$ 187,584			$ 180,700

Wahlberg Company Balance Sheets December 31
Assets		2020			2019
Current assets
Cash		$60,100			$64,600
Debt investments (short-term)		68,100			50,200
Accounts receivable		116,200			102,900
Inventory		123,100			114,500
Total current assets		367,500			332,200
Plant assets (net)		604,300			520,500
Total assets		$971,800			$852,700
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$160,300			$144,100
Income taxes payable		43,600			42,900
Total current liabilities		203,900			187,000
Bonds payable		220,000			200,000
Total liabilities		423,900			387,000
Stockholders’ equity
Common stock ($5 par)		282,200			304,000
Retained earnings		265,700			161,700
Total stockholders’ equity		547,900			465,700
Total liabilities and stockholders’ equity		$971,800			$852,700

All sales were on account. Net cash provided by operating activities for 2020 was $232,000. Capital expenditures were $138,000, and cash dividends were $83,584.

Compute the following ratios for 2020. (Round Earnings per share, Current ratio and Asset turnover to 2 decimal places, e.g. 1.65 or 1.65:1, and all other answers to 1 decimal place, e.g. 6.8 or 6.8%. Use 365 days for calculation.)

(a)		Earnings per share		$
(b)		Return on common stockholders’ equity			%
(c)		Return on assets			%
(d)		Current ratio			:1
(e)		Accounts receivable turnover			times
(f)		Average collection period			days
(g)		Inventory turnover			times
(h)		Days in inventory			days
(i)		Times interest earned			times
(j)		Asset turnover			times
(k)		Debt to assets ratio			%
(l)		Free cash flow		$

Answer 1

Answer: ALL AMOUNT IN DOLLARS($)

Calculations of ratios for 2020:-

1. Earning per share = Net income/no. of shares of common stock

= 187584/56440

= $3.32 per share

No. of shares os common stock = 282200/5 = 56440 shares

2. Return on common stockholder's equity = (Earning available for equity shareholders/common stock equity)*100

= (187584/547900)*100

= 34.2%

3. Return on asset = (Net income/average total asset)*100

= (187584/912250)*100

= 20.5%

Average total asset = (opening asset+closing asset)/2

= (852700+971800)/2

= 912250

4. Current ratio = Current asset/current liability

= 367500/203900

= 1.80:1

5. Account receivable turnover = Credit sales/average debtor

= 1815100/109550

= 16.5 times

Average debtors = (opening debtor+closing debtor)/2

= (102900+116200)/2

= 109550

6. Average collection preiod = 365/16.5

= 22.1 days

7. Stock turnover ratio = Cost of goods sold/average stock

= 1011300/118800

= 8.5 times

Average stock = (opening stock+closing stock)/2

= (114500+123100)/2

= 118800

8. Days in inventory = 365/8.5

= 42.9 days

9. Times interest earned = Earning before interest anmd tax/total interest

= 286400/18800

= 15.2 times

10. Asset turnover = Turnover/total asset

= 1815100/971800

= 1.56 times

11. Debt to asset ratio = (Debt/asset)*100

= (220000/971800)*100

= 22.6%

Debt(Bonds payable) = 220000

12. Free cash flow = Cash from operations - Capital expenditures

= 232000 - 138000

= $94000